December 03, 2004

Economic development - Different models for city-wide internet service

A headline yesterday in the NY Times read: "Pennsylvania Limits Cities in Offering Net Access." Some quotes from the beginning of the Times story:

In a victory for Verizon Communications, a measure in a new Pennsylvania law will make it harder for cities to build high-speed Internet networks that compete with major telecommunications providers.

The measure, part of a broad telecommunications law that was signed late Tuesday by Gov. Edward G. Rendell, has been watched closely by telephone companies and cities across the country. The industry and municipal governments have increasingly found themselves at odds, as cities try to spur the growth of high-speed Internet access by building their own networks - often in competition with the dominant local phone company.

Under the new law's Internet provision, cities in Pennsylvania that want to build their own high-speed data networks must first give the main local phone company the right to build such a network within 14 months. If the phone company proceeds, the city must drop its plans to build a broadband network.

NPR had a report on Verizon's efforts earlier this week. The description: "Philadelphia wants to hook up the entire city with high-speed, wireless Internet access in order to spur economic development. But Verizon has successfully backed a state bill that would make it illegal for any government entity in to compete with the telecom company in providing high-speed Internet service."

The San Jose Mercury News has a column today titled "Just try to stop the coming flood of wireless Internet services." Some quotes:

Verizon, the local phone company and DSL provider in much of Pennsylvania, took offense. Why should we spend hundreds of millions of dollars to upgrade our network, the company argued, if we face subsidized government competition?

The dispute landed in the state legislature, which essentially took Verizon's side in a complicated bill that -- among other things -- effectively said cities in Pennsylvania couldn't build fee-supported broadband networks without first obtaining Verizon's permission.

Gov. Ed Rendell signed the bill into law Tuesday evening, a few hours after Verizon and Philadelphia officials hammered out an agreement that Verizon wouldn't seek to block the city's WiFi project, due to launch in 2006. Other cities in the state got no such exemption.

While an impressive display of lobbying power, Verizon is trying to hold back the ocean with a bucket.

But then the column goes on to make an unexpected point:
Wireless networks are much, much cheaper to build than conventional wired phone or cable systems, which require digging up streets or putting up poles.

The costs are so low that many homes could soon have several choices for high-speed wireless Internet service.

Those choices won't come from government, but from the private sector.

Several cities in Indiana are considering the benefits of community-wide wireless access. The Munster Times today has a story about Highland's plans. The Indianapolis Star had a story Nov. 8, headlined "Public buildings may go wireless: City negotiating with SBC, others to make Wi-Fi Internet service available next year." Some quotes from that story:
Mayor Bart Peterson confirmed the city is negotiating with SBC Communications and others to provide the wireless service, known as Wi-Fi, in public buildings. * * *

Officials said they don't know which buildings and sites would be covered and what, if anything, the service would cost computer users.

But the Peterson administration acknowledged SBC has aggressively pushed its FreedomLink network, a subscriber-based service that costs $19.95 a month and is already in place elsewhere in Indiana.

Some computer users who link up with the city's hodgepodge of wireless Internet access points, known as "hot spots," said they would welcome a Wi-Fi expansion into public places. Some said they are wary of letting a single company dominate the market. * * *

Parks are already "lit up" with access in New York and Austin. Libraries are wireless in Seattle, Memphis, Tenn., and Houston. Philadelphia is considering a $10 million project to spread wireless access throughout the city.

In most of those instances, access is free and equipment is maintained by nonprofit groups or private businesses. Large telecommunications companies such as SBC and T-Mobile also provide Wi-Fi, usually for a fee. * * *

This summer, Evansville became the first Indiana city to bring Wi-Fi to large portions of its downtown after it made a deal with SBC that appears to be similar to what city officials are discussing here.

The agreement, like a cable franchise, allows SBC to install its antennas and network. The company charges users $19.95 a month, and a portion of that is spent on improving public technology. Monthly access fees are reduced to $1.99 if users purchase the company's DSL Internet service at home.

As part of the arrangement, though, the company attempts to secure exclusive rights with cities to offer Wi-Fi within reach of its antennas.

Dave Mockert, with the city's Information Services Agency, said Indianapolis would not agree to an exclusive arrangement.

Posted by Marcia Oddi at December 3, 2004 07:11 AM